Zeppelin Real Estate Analysis Limited
market is generally / potentially gullible when
it market participants can be easily persuaded, though persuasion in
this sense carries with it a negative tone as it implies someone is
being taken advantage of (fooled) by another party resulting in the
demise of the former and incurring a benefit for the latter. There is
even no need for the former to present lies, half-truths, or
twisted-facts, and the mere exaggerating (or exceedingly downplaying) of
certain information, data, or opinion would usually suffice. Or for that
matter, the related piece of information, data, or advice can be
positive in nature e.g. reduced interest rates and exaggerating its
capability in leading to a better economy, yet it can also be negative
e.g. reduced family income and downplaying its impact on the economy and
real assets. Naturally, market participants that make good use of
prevailing market conditions to their own benefit without falling for
the exaggerated / downplayed messages are not considered gullible.
gullible a market is depends
on a lot of factors and circumstances, and these would include the overall
educational level, societal sophistication, attitude toward life, amount of
wealth, cash liquidity, economic performance, and the like among others. Of
all these, perhaps the ability to control, manage, and / or better utilize
one¡¦s greed level and emotions may be paramount, and at times seemingly
well-educated professionals can also fall prey to their own greed and
emotions. Markets which participants generally adopt a rational and
methodological approach to investment are likely to be less gullible and
vice versa. Nonetheless, the more rational markets tend to be less
¡¥exciting¡¦ or volatile while the opposite is true for those markets that are
not given all things being equal. A casual observation of major world
markets today seems to suggest rational markets are few and far between.
also reflects how
self-confident the participants ¡§really¡¨ (versus pretending to be
self-confident) are, and the more self-confident they are, the less gullible
they tend to be. Or putting it this way, the less self-confident the
participants are, the more they have to rely on the advice and opinions of
others, and thus are subject to a higher chance of manipulation. Some
manipulators, defined as those dishing out knowingly in most cases the
exaggerated / downplayed messages, would love a gullible market, in
particular a cash-rich one. Shrewd manipulators would even let the gullible
participants feel invincible.
the level of gullibility
is not an easy task though volatility can be a useful indicator,
notwithstanding such can also be caused by a variety of other factors.
Quantitative methods aside, gullibility can also be observed via gauging
market reactions to certain market events, news, messages, or information.
In short, a gullible market offers an easier opportunity to make more money
(higher return) though may also present a bit more risk (as the gullible may
lose confidence easily or can be fickle minded) given all things be equal.
The article and/or content contained herein are for general reference only
and are not meant to substitute for proper professional advice and/or due
diligence. The author(s) and Zeppelin, including its staff, associates,
consultants, executives and the like do not accept any responsibility or
liability for losses, damages, claims and the like arising out of the use or
reference to the content contained herein.
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